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Electricity Demand: Trends Historically Related to Economic Growth

Historically, the demand for electricity has been related to economic growth. That positive relationship is expected to continue, but the ratio is uncertain. During the 1960s, electricity demand grew by more than 7 percent per year, nearly twice the rate of economic growth. In the 1970s and 1980s, however, the ratio of electricity demand growth to economic growth declined to 1.5 and 1.0, respectively. Several factors have contributed to this trend, including increased market saturation of electric appliances, improvements in equipment efficiency and utility investments in demand-side management programs, and more stringent equipment efficiency standards. Throughout the forecast, growth in demand for office equipment and personal computers, among other equipment, is dampened by slowing growth or reductions in demand for space heating and cooling, refrigeration, water heating and lighting. The continuing saturation of electricity appliances, the availability and adoption of more efficient equipment, and efficiency standards are expected to hold the growth in electricity sales to an average of 1.8 percent per year between now and 2020, compared with 3 percent annual growth in gross domestic product.

Changing consumer markets could mitigate the slowing of electricity demand growth seen in these projections. New electric appliances are introduced frequently. If new uses of electricity are more substantial than currently expected, they could offset future efficiency gains to some extent.